Vanuatu has been urged to fix a potentially disastrous flaw in its citizenship-for-sale system.
The chairman of Vanuatu's Citizenship Commission, Ronald Warsal. Photo: Investment Immigration Insider
Trade in citizenship for investment has been an increasingly significant revenue earner for Vanuatu in recent years. This year, as the Covid-19 pandemic has caused an increase in citizenship sales in general around the world, Vanuatu is tracking for a record level of sales.
As of mid-August, Vanuatu had earned around $US84.6m in revenue from citizenship sales in 2020, a rare economic success in a cyclone-hit year of fiscal strain for the Pacific nation.
The sale of what is called "honorary citizenship" in Vanuatu has been on offer for several years under the Capital Investment Immigration Plan and more recently the Development Support Plan.
People from mainland China make up the bulk of those who have purchased honorary citizenship, at the average price of around $US130,000, entitling them to a Vanuatu passport.
However international tax and immigration consultant David Lesperance warned that since honorary citizens were not full Vanuatu citizens but still possessed the regular Vanuatu passport, the travel document could be misleading at international borders.
The cover of the Vanuatu passport. Photo: Wikimedia Commons
Lesperance said that until the distinction was made in the citizenship scheme, Vanuatu was selling a bad product.
"This product will work for travel right up until the moment that Australia or New Zealand or the Schengen states realise, hey, there's a whole bunch of people who are presenting us with Vanuatu passports who are not Vanuatu nationals."
The chairman of Vanuatu's Citizenship Commission, Ronald Warsal, who took up his position in May, said he understood that honorary citizenship was not being sold anymore.
"As far as I'm concerned, it only existed previously," he told RNZ Pacific.
But Lesperance said the lack of legislation to back up the claim that honorary citizenship had ceased was concerning, pointing out that questions relating to previously minted honorary citizens who held regular Vanuatu passports remained unresolved.
Asked for comment on the matter, Immigration New Zealand only said Vanuatu was classified as a visa-required country when its passport holders sought to enter New Zealand.
"A valid, acceptable travel document (for example a passport or government-issued certificate of identity) is a mandatory requirement for both temporary entry and residence class visa applications," an Immigration NZ spokesman said.
David Lesperance, the Immigration & International Tax Consultant and Managing Partner at Lesperance & Associates Photo: Supplied
However Lesperance cautioned that during a pandemic, when the identity and path of international travellers had become of critical importance at borders, the honorary citizenship issue should be of concern to New Zealand and other countries. It was a political time-bomb for Vanuatu, he said.
"It may have been a product put out by three governments ago, that may not be the current party, but they're going to be the ones stockholding the bag when it blows up."
Vanuatu's Deputy Prime Minister, Ishmael Kalsakau, admitted the situation was problematic, but indicated the government had come up with a "way out" to protect the integrity of the green passport of regular Vanuatu citizens.
"My team have drawn up policy papers to deal with this issue in the form of a new passport that takes care of persons with honorary status per people who are here on economic or investment purposes to be afforded a categorisation of passport.
"It's a sort of an economic passport, different in colour. It's going to be a yellow passport, not the green one. It clears up issues of integrity and sanctity," Kalsakau said.
While he said a new category of passport was being created, a company had reportedly been engaged by the government to sell Vanuatu citizenship to 300 stateless or nomadic people. It's described as a way to help people who have been displaced from their homeland due to discrimination or other factors.
The leader of the country's parliamentary opposition, Ralph Regenvanu said he was concerned that international criminals and people stripped of citizenship in other countries for nefarious activities could more easily become citizens of Vanuatu.
Vanuatu opposition leader Ishmael Kalsakau Photo: RNZ/Sally Round
According to Ronald Warsal, there's a robust system in place in ensure applicants for Vanuatu citizenship are subject to background checks.
"There are three to four checks done before an applicant is given the citizenship, just to ensure the people we give them to (don't have) adverse records which would cause problems for our country and the countries that they go through," he said.
Meanwhile, David Lesperance urged Vanuatu to move quickly to address the flaw in honorary citizenship status, suggesting that it will sooner or later be exposed.
It's not just the honorary citizens who may encounter difficulties. He also warned that if their passport becomes generally tainted, it could mean ni-Vanuatu were refused entry at destinations abroad.
